Filing Taxes in Both Canada and the US; pregnant, seasonal job, and need advice

[SugarPlumFairy 3]

Hi Everyone,

Wondering if I can get any advice for this upcoming tax season as we just found out I'm pregnant (not planned) and now really can't afford hiring an accountant to do this work for us. I had consulted an accountant a couple weeks ago, before I found out I was pregnant, and in her email she said briefly that,

"In regards to reporting your Canadian sourced earned income on a US joint filed return: while you do not qualify for the Foreign Tax Credit, you can qualify for the Foreign Earned Income Exclusion. This exclusion (Form 2555) allows you to exclude up to $101,300 of foreign sourced earned income from the US return if you were physically present in Canada for at least 330 full days. There is a specific note in the instructions that reads: "A nonresident alien who, with a US citizen or US resident alien spouse, chooses to be taxed as a resident of the US can qualify under this test if the time requirements are met."

My USC husband worked a full year in the US in 2016, and I (the Canadian, non-resident that has filed for AOS) worked a half year in Canada before moving to the US. I have not worked in the US at all in 2016. We know that I have to file a Canadian tax return, and he has to file an IRS tax return.

These are our questions:

1) Does the accountant I consulted mean that I needed to be present for 330 years within the last 12 months or what time period is this in? I have not been present for 330 days in the least year in Canada.

2) Should my husband and I file married, jointly or married, separately, or married, separately with an exemption for spouse on the IRS return? We just have our basic incomes as explained above, and a few investments-no dependents or anything else complicated so far. I do have an SSN number in my married name as of today.

3) If we file married, separately, do I need to file a return with the IRS at all for 2016? How does this look for our case if I don't file, and do I need to get a professional to write down the reasons for me not filing to show the IRS or can I just tell them the reasons (no income in the US, not an established resident, etc.)

4) When I file my Canadian tax return, do I have to report my husband's income on there?

5)) If we file married, jointly on the IRS return, we cannot take any foreign tax credit, so I would be taxed on the whole of my worldwide income a second time after completing the Canadian tax return. How do we fill out the 1040 form if we choose to do it this way? Can anyone direct me to any particular forum discussions that can show me how to fill it out?

6) For the IRS return, can we use Turbo Tax, print the return out, and attach the statement that I am treated as a resident for the year if we file married, jointly?

I just received my EAD, so we are now trying to find me a job until I deliver. My husband works a job on a seasonal basis and we are going to be just above the poverty line with our new baby. Should we reveal that we are pregnant at the interview? Any advice is helpful for any of these questions.

Thank you very much.

[dkunkle 2]

We are in almost exactly the same situation. I'm U.S. resident, husband is Canadian and had only Canadian income last year. He got his green card mid-year so he is dual status.

Can you share the name of the cross-border tax company you talked to? I'm curious as to what they quoted you for the cost to file your taxes.

 

I'm researching all of this and will report back here to share whatever i find. Maybe we can conquer these questions together.

[SugarPlumFairy 3]

3 hours ago, dkunkle said:

We are in almost exactly the same situation. I'm U.S. resident, husband is Canadian and had only Canadian income last year. He got his green card mid-year so he is dual status.

Can you share the name of the cross-border tax company you talked to? I'm curious as to what they quoted you for the cost to file your taxes.

 

I'm researching all of this and will report back here to share whatever i find. Maybe we can conquer these questions together.

I will PM you the quote. 

[brentos 53]

Hello,

 

Just curious if either of you figured out how to handle this situation? Mine is a bit different (I moved to the US in February of 2016 and basically got paid for 2 months in Canada and then started working right away in the US). But I figure any sort of insight will help me.

 

Thanks,

Brent

[AstroCanada 206]

Yet another Canadian/American couple here researching taxes for the year not to thread hijack, but maybe we can all exchange information.

 

I (the American) lived and worked in Canada 3/4 of 2016.  My spouse is Canadian and immigrated in January.  For 2016, I'm wondering if we can apply the foreign earned income exclusion for our income.  In the past, I've claimed a tax credit for my Canadian taxes paid.  

 

I spoke to one firm in LA for cross-border taxes, but they charge a minimum of $2,500 to touch cross-border taxes.

[MariaR323 199]

On 2/24/2017 at 9:49 AM, AstroCanada said:

Yet another Canadian/American couple here researching taxes for the year not to thread hijack, but maybe we can all exchange information.

 

I (the American) lived and worked in Canada 3/4 of 2016.  My spouse is Canadian and immigrated in January.  For 2016, I'm wondering if we can apply the foreign earned income exclusion for our income.  In the past, I've claimed a tax credit for my Canadian taxes paid.  

 

I spoke to one firm in LA for cross-border taxes, but they charge a minimum of $2,500 to touch cross-border taxes.

Sounds like you would file as you normally would and claim the foreign tax credit for yourself and for your husband it totally sounds like he can use the foreign earned income exclusion on his foreign income. Be sure you are separating and calculating the foreign tax credit on your foreign earned income only and the exclusion on his foreign earned income only as well.

 

Form 1116 for you and Form 2555 for him. The $2,500 fee sounds excessive but not sure what else is involved in your tax return preparation that you received that quote. Try looking around for another tax preparer. Maybe if you travel out of the city the fee gets lower.

 

[Gitana 11]

1. 330 days rule means you need to be present in foreign country(ies) during ANY consecutive 12 month.

For example, if you moved to USA July 1st 2016 then your qualifying period will be from August 4th 2015 to August 4th 2016( that is assuming you never traveled to USA in this period) Then in 2016 you have 217 days that qualifies for foreign income exclusion. 217/366*101,300=60,060, which is the amount of your Canadian income you exclude from being tax in USA

2. you can file married jointly or separate, 

3. being USA resident you have to report your foreign income so yes, you need to file return even if filing married separately

5. you will not be taxed on your Canadian income if it's less than amount of your exclusion.

on the form 1040 line 21 put : Form 2555 and exclusion amount in brackets(negative)

 

Edited March 1, 2017 by Gitana

[SugarPlumFairy 3]

Thank you so much for your help Gitana!

[Shanelle 21]

I justed America Ex Pat Taxes company.  They are very good and thorough.  They did both Canadian and US returns for myself and my husbands (US Citizen) and it cost me approximately $2,000   OUCH!!  But, I highly recommend that company.